What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-29 compared with 2021-10-29 · 224 added, 334 removed, 486 unchanged (53% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

Assets September 30, 2021 (unaudited) December 31, 2020

(Dollars in thousands, except share and per share data)

Assets March 31, 2022 (unaudited) December 31, 2021

Current assets:

Cash and cash equivalents $ 64,466 $ 103,239

Accounts receivable, net of allowance for doubtful accounts of $ 930 and $ 2,092 at September 30, 2021 and December 31, 2020 respectively

Accounts receivable, net of allowance for doubtful accounts of $ 1,164 and $ 928 at March 31, 2022 and December 31, 2021 respectively

136,974 117,408

Inventories 81,925 70,620

Inventories, net 108,411 91,058

Prepaid expenses 5,383 6,116

Prepaid income taxes 4,115 3,447

Other current assets 4,570 4,411

3 unchanged sentences

Intangible assets with finite lives, net 88,525 94,665

Right of use assets 9,280 8,410

Right of use assets - operating leases 6,901 6,929

Right of use assets - finance lease 2,308 2,359

Derivative assets 882 —

Other assets 13,482 11,674

6 unchanged sentences

Dividends payable 129 20,886

Lease liabilities - current 2,443 2,337

Income taxes payable 9,936 1,334

Operating lease liabilities - current 2,194 2,194

Finance lease liabilities - current 169 167

Total current liabilities 123,529 143,802

1 unchanged sentence

Deferred income taxes 47,033 46,455

Lease liabilities - non-current 6,989 6,079

Operating lease liabilities - non-current 4,730 4,811

Finance lease liabilities - non-current 2,260 2,303

Derivative liabilities — 2,658

8 unchanged sentences

Authorized 120,000,000 shares;

32,467,909 shares issued and 32,382,637 shares outstanding at September 30, 2021 and 32,448,705 shares issued and 32,372,621 outstanding at December 31, 2020, respectively

32,116,069 shares issued and outstanding at March 31, 2022 and 32,287,150 shares issued and outstanding at December 31, 2021, respectively

Additional paid-in capital 116,771 147,716

Retained earnings 761,058 732,138

Accumulated other comprehensive income ( 2,578 ) 4,173

Treasury stock, at cost:

85,272 and 76,084 shares at September 30, 2021 and December 31, 2020, respectively

( 11,080 ) ( 7,873 )

Accumulated other comprehensive loss ( 6,289 ) ( 4,993 )

Total stockholders' equity 873,682 877,015

3 unchanged sentences

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Dollars in thousands, except per share data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net sales $ 228,867 $ 185,656

9 unchanged sentences

Interest expense, net 545 725

Other (income) expense, net ( 128 ) 168 ( 295 ) 244

428 1,121 1,594 3,853

Other expense (income), net 161 ( 133 )

Earnings before income tax expense 37,630 29,983

6 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Dollars in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net earnings $ 28,930 $ 23,411

Other comprehensive income (loss), net of tax:

Other comprehensive loss, net of tax:

Foreign currency translation adjustment ( 2,842 ) ( 6,143 )

Unrealized gain (loss) on cash flow hedge 341 227 1,204 ( 2,659 )

Unrealized gain on cash flow hedge 1,573 512

Change in postretirement benefit plans ( 27 ) 7

Other comprehensive (loss) income ( 3,010 ) 4,677 ( 6,751 ) 4,347

Other comprehensive loss ( 1,296 ) ( 5,624 )

Comprehensive income $ 27,634 $ 17,787

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2021 and 2020

(In thousands, except share and per share data)

For the three months ended March 31, 2022 and 2021

(Dollars in thousands, except share and per share data)

Stockholders'

2 unchanged sentences

Comprehensive

(Loss) Income Common Stock Treasury Stock Additional

Shares Amount Shares Amount

(Loss) Income Common Stock Additional

Shares Amount

Balance - December 31, 2021 $ 877,015 $ 732,138 $ ( 4,993 ) 32,287,150 $ 2,154 $ 147,716

1 unchanged sentence

Other comprehensive loss ( 1,296 ) — ( 1,296 ) — — —

Treasury shares purchased ( 1,596 ) — — — — ( 13,475 ) ( 1,596 ) —

Repurchases of common stock ( 34,599 ) — — ( 245,685 ) ( 16 ) ( 34,583 )

Dividends ( 10 ) ( 10 ) — — — —

Shares and options issued under stock plans 3,642 — — 74,604 4 3,638

Balance - March 31, 2022 $ 873,682 $ 761,058 $ ( 6,289 ) 32,116,069 $ 2,142 $ 116,771

Net earnings 22,731 22,731 — — — — — —

Other comprehensive income 1,883 — 1,883 — — — — —

Treasury shares purchased ( 9,240 ) — — — — ( 72,649 ) ( 9,240 ) —

Shares and options (canceled) issued under stock plans 4,776 — — ( 190 ) — 25,683 2,978 1,798

Balance - June 30, 2021 869,642 702,882 432 32,470,829 2,165 ( 66,055 ) ( 8,472 ) 172,635

Net earnings 25,013 25,013 — — — — — —

Other comprehensive (loss) ( 3,010 ) — ( 3,010 ) — — — — —

Treasury shares purchased ( 7,926 ) — — — — ( 61,075 ) ( 7,926 ) —

Shares and options (canceled) issued under stock plans 5,359 — — ( 2,920 ) — 41,858 5,318 41

Balance - September 30, 2021 $ 889,078 $ 727,895 $ ( 2,578 ) 32,467,909 $ 2,165 ( 85,272 ) $ ( 11,080 ) $ 172,676

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (continued)

For the three and nine months ended September 30, 2021 and 2020

(In thousands, except share and per share data)

Stockholders'

Equity Retained

Earnings Accumulated

Comprehensive

(Loss) Income Common Stock Treasury Stock Additional

Shares Amount Shares Amount

Balance - December 31, 2020 $ 828,233 $ 656,740 $ 4,173 32,372,621 $ 2,160 $ 165,160

1 unchanged sentence

Other comprehensive loss ( 5,624 ) — ( 5,624 ) — — —

Treasury shares purchased ( 891 ) — — — — ( 8,224 ) ( 891 ) —

Repurchases of common stock ( 1,596 ) — — ( 13,475 ) ( 1 ) ( 1,595 )

Shares and options issued under stock plans 5,068 — — 92,784 6 5,062

Balance - March 31, 2021 $ 849,492 $ 680,151 $ ( 1,451 ) 32,451,930 $ 2,165 $ 168,627

Net earnings 21,125 21,125 — — — — — —

Other comprehensive income 2,575 — 2,575 — — — — —

Treasury shares purchased ( 2,134 ) — — — — ( 24,281 ) ( 2,134 ) —

Shares and options issued under stock plans 4,686 — — 4,000 — 44,935 4,194 492

Balance - June 30, 2020 792,523 631,814 ( 5,894 ) 32,451,415 2,164 ( 109,919 ) ( 9,634 ) 174,073

Net earnings 21,568 21,568 — — — — — —

Other comprehensive income 4,677 — 4,677 — — — — —

Treasury shares purchased ( 2,957 ) — — — — ( 31,224 ) ( 2,957 ) —

Shares and options issued under stock plans 3,632 — — — — 32,330 2,545 1,087

Balance - September 30, 2020 $ 819,443 $ 653,382 $ ( 1,217 ) 32,451,415 $ 2,164 ( 108,813 ) $ ( 10,046 ) $ 175,160

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

(In thousands)

Nine Months Ended

September 30,

(Dollars in thousands)

Three Months Ended

Cash flows from operating activities:

3 unchanged sentences

Stock compensation expense 3,077 2,622

Deferred income taxes ( 806 ) 532

Provision for doubtful accounts 328 69

Unrealized (gain)/loss on foreign currency transaction and deferred compensation ( 534 ) 153

Asset impairment charge — 1,915

(Gain)/Loss on disposal of assets ( 996 ) 57

Unrealized loss (gain) on foreign currency transactions and deferred compensation 37 ( 229 )

Gain on disposal of assets ( 29 ) ( 1 )

Changes in assets and liabilities

8 unchanged sentences

Capital expenditures and intangible assets acquired ( 10,256 ) ( 6,312 )

Proceeds from insurance and sale of assets 1,272 22

Purchase of convertible note — ( 850 )

Proceeds from sale of assets 184 86

Net cash used in investing activities ( 10,072 ) ( 6,226 )

5 unchanged sentences

Dividends paid ( 20,703 ) ( 18,700 )

Purchase of treasury stock ( 18,762 ) ( 5,982 )

Repurchase of common stock ( 34,599 ) ( 1,596 )

Net cash used in financing activities ( 34,845 ) ( 27,933 )

Effect of exchange rate changes on cash ( 877 ) ( 2,484 )

Increase in cash and cash equivalents 5,442 13,295

(Decrease) increase in cash and cash equivalents ( 38,773 ) 3,964

Cash and cash equivalents beginning of period 103,239 84,571

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share and per share data)

(All dollar amounts in thousands, except share and per share data)

NOTE 1 – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The condensed consolidated financial statements presented herein have been prepared in accordance with the accounting policies described in its December 31, 2020 consolidated financial statements, and should be read in conjunction with the consolidated financial statements and notes, which appear in the Annual Report on Form 10-K for the year ended December 31, 2020.

The condensed consolidated financial statements presented herein have been prepared in accordance with the accounting policies described in the December 31, 2021 consolidated financial statements, and should be read in conjunction with the consolidated financial statements and notes, which appear in the Annual Report on Form 10-K for the year ended December 31, 2021.

The condensed consolidated financial statements reflect the operations of Balchem Corporation and its subsidiaries (the "Company").

5 unchanged sentences

GAAP” or “GAAP”) governing interim financial statements and the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934 (the "Exchange Act") and therefore do not include some information and notes necessary to conform to annual reporting requirements.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results expected for the full year or any interim period.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results expected for the full year or any interim period.

Certain reclassifications have been made to prior period amounts to conform with the current period's presentation.

Recent Accounting Pronouncements

Recently Issued Accounting Standards

Recently Adopted Accounting Standards

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, "Reference Rate Reform (Topic 848):

6 unchanged sentences

The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

The Company is currently evaluating the impact of this pronouncement on the consolidated financial statements and disclosures.

Recently Adopted Accounting Standards

The Company adopted the Standard Update in 2021.

The adoption of the Standard update did not have a significant impact on the Company's consolidated financial statements and disclosures.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

1 unchanged sentence

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The effective date of this Standard Update is for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

Early adoption is permitted.

The Standard Update may be adopted either using the prospective or retrospective transition approach and could also be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The Company adopted the new Standard on January 1, 2021.

The Standard did not have a significant impact on the Company's consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” The guidance contained in this ASU requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the noncancelable term of the cloud computing arrangements plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider.

This ASU became effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

The Standard may be adopted either using the prospective or retrospective transition approach.

The Company adopted the new Standard on January 1, 2020.

The Standard Update did not have a significant impact on the Company’s consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans,” which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans.

The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant.

This Update should be applied on a retrospective basis to all periods presented and is effective for fiscal years ending after December 15, 2020.

Early adoption is permitted.

The Company adopted the new Standard on January 1, 2020.

The Standard Update did not have a significant impact on the Company's consolidated financial statements and disclosures.

In January 2017, the FASB issued ASU No.

2017-04, “Simplifying the Test for Goodwill Impairment”, which addresses changes to the testing for goodwill impairment by eliminating Step 2 of the process.

The guidance is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

The Company adopted the new Standard on January 1, 2020.

This ASU did not have a significant impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No.

2016-13, "Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments", which requires that credit losses be reported based on expected losses instead of the incurred loss model.

The Update made several consequential amendments to the codification which requires the accounting for available-for-sale debt securities to be individually assessed for credit losses when fair value is less than the amortized cost basis.

The FASB subsequently issued ASU 2019-04, ASU 2019-05, and ASU 2019-11, all of which further clarified ASU 2016-13.

The Company adopted the new Standard and related Updates on January 1, 2020.

The adoption did not have a significant impact on the consolidated financial statements.

ASU 2019-12 became effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The Company adopted ASU 2019-12 on January 1, 2021.

The adoption of ASU 2019-12 did not have a significant impact on the Company's consolidated financial statements and disclosures.

NOTE 2 – STOCKHOLDERS’ EQUITY

STOCK-BASED COMPENSATION

The Company’s results for the three and nine months ended September 30, 2021 and 2020 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:

Increase/(Decrease) for the Increase/(Decrease) for the

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

The Company’s results for the three months ended March 31, 2022 and 2021 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:

Increase/(Decrease) for the

Three Months Ended March 31,

Cost of sales $ 399 $ 299

1 unchanged sentence

Net earnings ( 2,379 ) ( 2,022 )

As allowed by ASC 718, the Company has made an estimate of expected forfeitures based on its historical experience and is recognizing compensation cost only for those stock-based compensation awards expected to vest.

The Company’s stock incentive plans allow for the granting of stock awards and options to purchase common stock.

As allowed by ASC 718, "Compensation-Stock Compensation", the Company has made an estimate of expected forfeitures based on its historical experience and is recognizing compensation cost only for those stock-based compensation awards expected to vest.

The Company’s incentive plans allow for the granting of stock awards and options to purchase common stock.

Both incentive stock options and nonqualified stock options can be awarded under the plans.

No option is exercisable after ten years from the date of grant.

No option will be exercisable for longer than ten years after the date of grant.

The Company has approved and reserved a number of shares to be issued upon exercise of the outstanding options that is adequate to cover all exercises.

As of September 30, 2021, the plans had 697,707 shares available for future awards.

Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three years for stock options, three to four years for employee restricted stock awards, three years for employee performance share awards, and three to four years for non-employee director restricted stock awards.

As of March 31, 2022, the plans had 526,760 shares available for future awards.

Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three years for stock options, three to four years for employee restricted stock awards, three years for employee performance share awards, and three years for non-employee director restricted stock awards.

Certain awards provide for accelerated vesting if there is a change in control (as defined in the plans) or other qualifying events.

Option activity for the nine months ended September 30, 2021 and 2020 is summarized below:

For the nine months ended September 30, 2021 Shares (000s) Weighted

Option activity for the three months ended March 31, 2022 and 2021 is summarized below:

For the three months ended

March 31, 2022 Shares (000s) Weighted

Price Aggregate

4 unchanged sentences

Forfeited — —

Canceled ( 1 ) 74.57

Outstanding as of September 30, 2021 876 $ 87.91 $ 50,090 6.6

Exercisable as of September 30, 2021 540 $ 74.81 $ 37,961 5.5

For the nine months ended September 30, 2020 Shares (000s) Weighted

Outstanding as of March 31, 2022 968 $ 94.01 $ 41,483 6.6

Exercisable as of March 31, 2022 676 $ 81.06 $ 37,594 5.6

For the three months ended

March 31, 2021 Shares (000s) Weighted

Price Aggregate

4 unchanged sentences

Forfeited ( 2 ) 101.38

Outstanding as of September 30, 2020 932 $ 77.72 $ 20,638 6.5

Exercisable as of September 30, 2020 589 $ 67.66 $ 17,644 5.2

Canceled ( 1 ) 74.57

Outstanding as of March 31, 2021 950 $ 86.11 $ 37,322 7.0

Exercisable as of March 31, 2021 604 $ 73.11 $ 31,603 5.8

ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

3 unchanged sentences

risk-free interest rates of 2.0 % and 0.5 %;

and expected lives of 4.9 years and 3.8 years, in each case for the nine months ended September 30, 2021 and 2020, respectively.

and expected lives of 4.9 years and 4.9 years, in each case for the three months ended March 31, 2022 and 2021, respectively.

The Company used a projected expected life for each award granted based on historical experience of employees’ exercise behavior.

3 unchanged sentences

Treasury zero-coupon issues with a remaining term equal to the expected life.

Other information pertaining to option activity during the three and nine months ended September 30, 2021 and 2020 was as follows:

Other information pertaining to option activity during the three months ended March 31, 2022 and 2021 was as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Weighted-average fair value of options granted $ 40.26 $ 33.10

Total intrinsic value of stock options exercised ($000s) $ 654 $ 1,917

Non-vested restricted stock activity for the nine months ended September 30, 2021 and 2020 is summarized below:

Nine Months Ended September 30,

Non-vested restricted stock activity for the three months ended March 31, 2022 and 2021 is summarized below:

Three Months Ended March 31,

Shares (000s) Weighted

6 unchanged sentences

Forfeited — — ( 2 ) 86.69

Non-vested balance as of September 30 176 $ 97.17 151 $ 89.45

Non-vested performance share activity for the nine months ended September 30, 2021 and 2020 is summarized below:

Nine Months Ended September 30,

Non-vested balance as of March 31 122 $ 121.56 183 $ 96.70

Non-vested performance share activity for the three months ended March 31, 2022 and 2021 is summarized below:

Three Months Ended March 31,

Shares (000s) Weighted

6 unchanged sentences

Forfeited ( 3 ) 84.09 ( 11 ) 74.57

Non-vested balance as of September 30 72 $ 110.22 71 $ 91.99

Non-vested balance as of March 31 70 $ 127.69 72 $ 110.22

The performance share (“PS”) awards provide the recipients the right to receive a certain number of shares of the Company’s common stock in the future, subject to an EBITDA performance hurdle, where vesting is dependent upon the Company achieving a certain EBITDA percentage growth over the performance period, and relative total shareholder return (TSR), where vesting is dependent upon the Company’s TSR performance over the performance period relative to a comparator group consisting of the Russell 2000 index constituents.

3 unchanged sentences

volatilities of 32 % and 33 %;

and initial TSR’s of 11.7 % and 10.9 %, in each case for the nine months ended September 30, 2021 and 2020, respectively.

and initial TSR’s of - 15.7 % and 11.7 %, in each case for the three months ended March 31, 2022 and 2021, respectively.

Expense is estimated based on the number of shares expected to vest, assuming the requisite service period is rendered and the probable outcome of the performance condition is achieved.

2 unchanged sentences

The PS will cliff vest 100 % at the end of the third year following the grant in accordance with the performance metrics set forth.

As of September 30, 2021 and 2020, there was $ 16,498 and $ 14,876 , respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans.

As of September 30, 2021, the unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.4 years.

As of March 31, 2022 and 2021, there was $ 23,131 and $ 23,009 , respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans.

As of March 31, 2022, the unrecognized

compensation cost is expected to be recognized over a weighted-average period of approximately 1.9 years.

The Company estimates that share-based compensation expense for the year ended December 31, 2022 will be approximately $ 12,350 .

REPURCHASE OF COMMON STOCK

The Company has an approved stock repurchase program.

The Company's Board of Directors has approved a stock repurchase program.

The total authorization under this program is 3,763,038 shares.

Since the inception of the program in June 1999, a total of 2,715,595 shares have been purchased, of which 85,272 shares remained in treasury at September 30, 2021.

The Company repurchases shares from employees in connection with settlement of transactions under the Company's equity incentive plans.

The Company also intends to acquire shares from time to time at prevailing market prices if and to the extent it deems it advisable to do so based on its assessment of corporate cash flow, market conditions and other factors.

During the nine months ended September 30, 2021 and 2020, the Company purchased 147,199 and 63,729 shares, respectively, from employees on a net-settlement basis to provide cash to employees to cover the associated employee payroll taxes and from open market purchases.

Since the inception of the program in June 1999, a total of 3,063,929 shares have been purchased.

The Company’s prior presentation of reflecting treasury stock separately within stockholders’ equity has been adjusted to conform to the presentation prescribed by the State of Maryland, where the Company is incorporated.

In connection therewith, adjustments to balances previously reflected as treasury stock of $ 2,210 and $ 7,873 as of March 31, 2021 and December 31, 2020, respectively, were made to the condensed consolidated statements of stockholders’ equity and prior references to “Treasury shares purchased” were updated to “Repurchases of common stock”, accordingly.

There was no impact to total stockholders’ equity in any of the years presented as a result of these updates.

The Company intends to acquire shares from time to time at prevailing market prices if and to the extent it deems it is advisable to do so based on its assessment of corporate cash flow, market conditions and other factors.

The Company also repurchases shares from employees in connection with settlement of transactions under the Company's equity incentive plans.

During the three months ended March 31, 2022 and 2021, the Company purchased 245,685 and 13,475 shares, respectively, from open market purchases and from employees on a net-settlement basis to provide cash to employees to cover the associated employee payroll taxes.

These shares were purchased at an average cost of $ 140.83 and $ 118.41 , respectively.

NOTE 3 – INVENTORIES

Inventories at September 30, 2021 and December 31, 2020 consisted of the following:

September 30, 2021 December 31, 2020

Inventories, net of reserves at March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 2022 December 31, 2021

Raw materials $ 24,128 $ 28,639

3 unchanged sentences

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at September 30, 2021 and December 31, 2020 are summarized as follows:

September 30, 2021 December 31, 2020

Property, plant and equipment at March 31, 2022 and December 31, 2021 are summarized as follows:

March 31, 2022 December 31, 2021

Land $ 11,570 $ 11,692

6 unchanged sentences

NOTE 5 – INTANGIBLE ASSETS

The Company had goodwill in the amount of $ 525,419 and $ 529,463 as of September 30, 2021 and December 31, 2020, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The decrease in goodwill is due to foreign exchange translation adjustments.

Identifiable intangible assets with finite lives at September 30, 2021 and December 31, 2020 are summarized as follows:

The Company had goodwill in the amount of $ 522,587 and $ 523,949 as of March 31, 2022 and December 31, 2021, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The decrease in goodwill is due to foreign exchange translation adjustments.

Identifiable intangible assets with finite lives at March 31, 2022 and December 31, 2021 are summarized as follows:

(in years) Gross Carrying Amount at

9/30/2021 Accumulated Amortization at 9/30/2021 Gross Carrying Amount at 12/31/2020 Accumulated Amortization at 12/31/2020

3/31/2022 Accumulated Amortization at

3/31/2022 Gross Carrying Amount at

12/31/2021 Accumulated Amortization at

Customer relationships & lists 10 - 20

6 unchanged sentences

$ 326,844 $ 238,319 $ 327,330 $ 232,665

Amortization of identifiable intangible assets was approximately $ 6,155 and $ 18,868 for the three and nine months ended September 30, 2021, respectively, and $ 6,911 and $ 20,875 for the three and nine months ended September 30, 2020, respectively.

Assuming no change in the gross carrying value of identifiable intangible assets, estimated amortization expense is $ 6,134 for the remainder of 2021, $ 22,999 for 2022, $ 19,407 for 2023, $ 10,573 for 2024, $ 6,327 for 2025 and $ 4,986 for 2026.

At September 30, 2021 and 2020, there were no identifiable intangible assets with indefinite useful lives as defined by ASC 350.

Identifiable intangible assets are reflected in “Intangible assets with finite lives, net” in the Company’s condensed consolidated balance sheets.

There were no changes to the useful lives of intangible assets subject to amortization during the nine months ended September 30, 2021 and 2020.

Amortization of identifiable intangible assets was $ 5,911 and $ 6,484 for the three months ended March 31, 2022 and 2021, respectively.

Assuming no change in the gross carrying value of identifiable intangible assets, the estimated amortization expense is $ 17,594 for the remainder of 2022, $ 19,393 for 2023, $ 10,516 for 2024, $ 6,260 for 2025, $ 4,938 for 2026 and $ 4,375 for 2027.

At March 31, 2022 and 2021, there were no identifiable intangible assets with indefinite useful lives as defined by ASC 350, "Intangibles-Goodwill and Other." Identifiable intangible assets are reflected in the Company's consolidated balance sheets under Intangible assets with finite lives, net.

There were no changes to the useful lives of intangible assets subject to amortization during the three months ended March 31, 2022 and 2021.

NOTE 6 – EQUITY-METHOD INVESTMENT

7 unchanged sentences

Additionally, voting rights ( 2 votes each) are not proportionate to the owners’ obligation to absorb expected losses or receive the expected residual returns of the joint venture.

The Company receives up to 2/3 of the production offtake capacity and absorbs operating expenses approximately proportional to the actual percentage of offtake.

The Company will receive up to 2/3 of the production offtake capacity and absorbs operating expenses approximately proportional to the actual percentage of offtake.

The joint venture is accounted for under the equity method of accounting since the Company is not the primary beneficiary as the Company does not have the power to direct the activities of the joint venture that most significantly impact its economic performance.

The Company recognized a lo ss of $ 142 and $ 416 for the three and nine months ended September 30, 2021, respectively, and $ 143 and $ 423 for the three and nine months ended September 30, 2020, respectively, relating to its portion of the joint venture's expenses in other expense.

The Company made capital contributions to the investment, net of return of capital, totaling $ 46 and $ 31 fo r the three and nine months ended September 30, 2021, respectively, and $ 25 and $ 823 for the three and nine months ended September 30, 2020, respectively.

The carrying value of the joint venture at September 30, 2021 and December 31, 2020 is $ 4,586 and $ 4,971 , respectively, and is recorded in other assets.

The Company recognized a loss of $ 140 and $ 144 for the three months ended March 31, 2022 and 2021, respectively, relating to its portion of the joint venture's expenses in other expense.

During the first quarter of 2022 and 2021, the Company made capital contributions to the investment totaling $ 58 and $ 13 , res pectively.

The carrying value of the joint venture at March 31, 2022 and December 31, 2021 is $ 4,417 and $ 4,499 , respectively, and is recorded in other assets.

NOTE 7 – REVOLVING LOAN

On June 27, 2018, the Company and a bank syndicate entered into a credit agreement (the "Credit Agreement"), which replaced the existing credit facility that had provided for a senior secured term loan of $ 350,000 and a revolving loan of $ 100,000 .

On June 27, 2018, the Company and a bank syndicate entered into the Credit Agreement, which replaced the credit facility that had provided for a senior secured term loan of $ 350,000 and a revolving loan of $ 100,000 .

The Credit Agreement, which expires on June 27, 2023, provides for revolving loans up to $ 500,000 (collectively referred to as the “loans”).

The loans may be used for working capital, letters of credit, and other corporate purposes and may be drawn upon at the Company’s discretion.

The initial proceeds from the Credit Agreement were used to repay the outstanding balance of $ 210,750 on its senior secured term loan, which was due May 2019.

As of September 30, 2021 and December 31, 2020 , the total balance outstanding on the Credit Agreement amounted to $ 108,569 and $ 163,569 , respectively.

The initial borrowing under the Credit Agreement was used to pay the outstanding balance of $ 210,750 on the Company's senior secured term loan under its former credit facility, which was due May 2019.

As of March 31, 2022 a nd December 31, 2021, t he total balance outstanding on the Credit Agreement amounted to $ 128,569 and $ 108,569 , respectively.

There are no installment payments required on the revolving loans;

1 unchanged sentence

Amounts outstanding under the Credit Agreement are subject to an interest rate equal to a fluctuating rate as defined by the Credit Agreement plus an applicable rate.

The applicable rate is based upon the Company’s consolidated net leverage ratio, as defined in the Credit Agreement, and the interest rate was 1.086 % at September 30, 2021.

The Company is also required to pay a commitment fee on the unused portion of the revolving loan, which is based on the Company’s consolidated net leverage ratio as defined in the Credit Agreement and ranges from 0.15 % to 0.275 % ( 0.15 % at September 30, 2021).

The unused portion of the revolving loan amounted to $ 391,431 at September 30, 2021.

The applicable rate is based upon the Company’s consolidated net leverage ratio, as defined in the Credit Agreement, and the interest rate was 1.447 % at March 31, 2022.

The unused portion of the revolving loan amounted to $ 371,431 at March 31, 2022.

The Company is also required to pay, as applicable, letter of credit fees, administrative agent fees, and other fees to the arrangers and lenders.

Costs associated with the issuance of the revolving loans are capitalized and amortized on a straight-line basis over the term of the Credit Agreement, which is not materially different than the effective interest method.

Costs associated with the issuance of the extinguished debt instrument were capitalized and amortized over the term of the respective financing arrangement using the effective interest method.

Capitalized costs net of accumulated amortization totaled $ 491 and $ 703 at September 30, 2021 and December 31, 2020, respectively, and are included in other assets on the condensed consolidated balance sheets.

Amortization expense pertaining to these costs totaled $ 71 and $ 212 , for both the three and nine months ended September 30, 2021 and 2020, and are included in interest expense in the accompanying condensed consolidated statements of earnings.

Costs associated with the issuance of the revolving loans are capitalized and amortized on a straight-line basis over the term of the Credit Agreement.

Costs associated with the issuance of the extinguished senior secured loan were capitalized and amortized

over the term of the respective financing arrangement using the effective interest method.

Capitalized costs net of accumulated amortization totaled $ 350 and $ 421 at March 31, 2022 and December 31, 2021, respectively, and are included in other assets on the condensed consolidated balance sheets.

Amortization expense pertaining to these costs totaled $ 71 for both the three months ended March 31, 2022 and 2021, and are included in interest expense in the accompanying consolidated statements of earnings.

The Credit Agreement contains quarterly covenants requiring the consolidated leverage ratio to be less than a certain maximum ratio and the consolidated interest coverage ratio to exceed a certain minimum ratio.

At September 30, 2021, the Company was in compliance with these covenants.

Indebtedness under the Company’s Credit Agreement is secured by assets of the Company.

At March 31, 2022, the Company was in compliance with these covenants.

Indebtedness under the Company’s loan agreements is secured by assets of the Company.

NOTE 8 – NET EARNINGS PER SHARE

The following presents a reconciliation of the net earnings and shares used in calculating basic and diluted net earnings per share:

The following presents a reconciliation of the net earnings and shares used in calculating basic and diluted net earnings per common share:

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net Earnings - Basic and Diluted $ 28,930 $ 23,411

Shares (000s)

Weighted Average Common Shares - Basic 32,041 32,255

3 unchanged sentences

Net Earnings Per Share - Diluted $ 0.89 $ 0.72

The number of anti-dilutive shares were 151,924 and 156,238 for the three and nine months ended September 30, 2021, respectively, and 172,122 and 215,271 for the three and nine months ended September 30, 2020 , respectively.

The number of anti-dilutive shares were 113,029 and 311,030 for the three months ended March 31, 2022 and 2021, respectively.

Anti-dilutive shares could potentially dilute basic earnings per share in future periods and therefore, were not included in diluted earnings per share.

NOTE 9 – INCOME TAXES

The Company’s effective tax rate for the three months ended September 30, 2021 and 2020, was 22.0 % and 22.7 %, respectively, and 22.7 % and 20.3 % for the nine months ended September 30, 2021 and 2020.

The decrease in the effective tax rate for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to higher tax benefits from stock-based compensation and the prior year being negatively impacted by clarifying regulations related to tax reform.

The increase in the effective tax rate for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to a reduction in certain tax credits, lower tax benefits from stock-based compensation, and higher enacted state tax rates.

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, and on December 27, 2020, Congress passed an additional round of COVID relief legislation as part of the Bipartisan-Bicameral Omnibus COVID Relief Deal.

The Company has reviewed the change in law and determined that it does not have a significant impact on the Company’s tax provision or financial statements.

In addition, Balchem will continue to evaluate and analyze the impact of the U.S.

The Company’s effective tax rate for the three months ended March 31, 2022 and 2021, was 23.1 % and 21.9 %, respectively.

The increase in the effective tax rate for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to a reduction in certain tax credits and increased international income subject to higher foreign tax rates.

Balchem will continue to evaluate and analyze the impact of the U.S.

Tax Cuts and Jobs Act that was enacted on December 22, 2017 and the additional guidance that has been issued, and may be issued, by the U.S.

Department of Treasury, the Securities and Exchange Commission ("SEC"), and/or the Financial Accounting Standards Board ("FASB") regarding this act.

Department of Treasury, the SEC, and/or the Financial Accounting Standards Board ("FASB") regarding this act.

Income taxes are accounted for under the asset and liability method.

1 unchanged sentence

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in

income in the period that includes the enactment date.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company regularly reviews its deferred tax assets for recoverability and would establish a valuation allowance if it believed that such assets may not be recovered, taking into consideration historical operating results, expectations of future earnings, changes in its operations, and the expected timing of the reversals of existing temporary differences.

2 unchanged sentences

It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken.

This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosures.

This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and

The application of ASC 740-10 requires judgment related to the uncertainty in income taxes and could impact our effective tax rate.

1 unchanged sentence

and in various states and foreign countries.

As of September 30, 2021, in the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2016.

As of September 30, 2021 and December 31, 2020, the Company had approximately $ 5,673 and $ 5,335 , respectively, of unrecognized tax benefits, which are included in other long-term obligations on the Company’s condensed consolidated balance sheets.

As of March 31, 2022, in the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2017.

As of March 31, 2022 and December 31, 2021, the Company had approximately $ 5,880 and $ 5,881 , respectively, of unrecognized tax benefits, which are included in other long-term obligations on the Company’s condensed consolidated balance sheets.

The Company includes interest expense or income as well as potential penalties on unrecognized tax positions as a component of income tax expense in the condensed consolidated statements of earnings.

The total amount of accrued interest and penalties related to uncertain tax positions at September 30, 2021 and December 31, 2020 was approximately $ 2,039 and $ 1,845 , respectively, and is included in other long-term obligations.

The total amount of accrued interest and penalties related to uncertain tax positions at March 31, 2022 and December 31, 2021 was approximately $ 2,148 and $ 2,106 , respectively, and is included in other long-term obligations.

NOTE 10 – SEGMENT INFORMATION

The Company reports three business segments:

Balchem Corporation reports three business segments:

Human Nutrition & Health, Animal Nutrition & Health, and Specialty Products.

6 unchanged sentences

Sales growth for human nutrition applications is reliant on differentiation from lower-cost competitive products through scientific data, intellectual property and customers' appreciation of brand value.

Consequently, the Company makes investments in such activities for long-term value differentiation.

This segment also serves the food and beverage industry for beverage, bakery, dairy, confectionary, and savory manufacturers.

The Company partners with its customers from ideation through commercialization to bring on-trend beverages, baked goods, confections, dairy and meat products to market.

The Company has expertise in trends analysis and product development.

When combined with its strong manufacturing capabilities in customized spray dried and emulsified powders, extrusion and agglomeration, blended lipid systems, liquid flavor delivery systems, juice and dairy bases, chocolate systems, as well as ice cream bases and variegates, the Company is a one-stop solutions provider for beverage and dairy product development needs.

Additionally, this segment provides microencapsulation solutions to a variety of applications in food, pharmaceutical and nutritional ingredients to enhance performance of nutritional fortification, processing, mixing, and packaging applications and shelf-life.

Consequently, HNH makes investments in the foregoing for long-term value differentiation.

HNH also serves the food and beverage industry for beverage, bakery, dairy, confectionary, and savory manufacturers.

HNH partners with its customers from ideation through commercialization to bring on-trend beverages, baked goods, confections, dairy and meat products to market.

HNH has expertise in trends analysis and product development.

When what is combined with its strong manufacturing capabilities in customized spray dried and emulsified powders, extrusion and agglomeration, blended lipid systems, liquid flavor delivery systems, juice and dairy bases, chocolate systems, as well as ice cream bases and variegates, HNH is a one-stop solutions provider for beverage and dairy product development needs.

Additionally, HNH provides microencapsulation solutions to a variety of applications in food, pharmaceutical and nutritional ingredients to enhance performance of nutritional fortification, processing, mixing, and packaging applications and shelf-life.

Major product applications are baked goods, refrigerated and frozen dough systems, processed meats, seasoning blends, confections, sports and protein bars, dietary plans, and nutritional supplements.

The Company also creates cereal systems for ready-to-eat cereals, grain-based snacks, and cereal based ingredients.

HNH also creates cereal systems for ready-to-eat cereals, grain-based snacks, and cereal based ingredients.

Animal Nutrition & Health

1 unchanged sentence

For ruminant animals, ANH's microencapsulated products boost health and milk production, delivering nutrient supplements that are biologically available, providing required nutritional levels.

The Company’s proprietary chelation technology provides enhanced nutrient absorption for various species of production and companion animals and is marketed for use in animal feed throughout the world.

ANH’s proprietary chelation technology provides enhanced nutrient absorption for various species of production and companion animals and is marketed for use in animal feed throughout the world.

ANH also manufactures and supplies choline chloride, an essential nutrient for monogastric animal health, predominantly to the poultry, pet and swine industries.

Choline, which is manufactured and sold in both dry and aqueous forms, plays a vital role in the metabolism of fat.

In poultry, choline

deficiency can result in reduced growth rates and perosis in young birds, while in swine production choline is a necessary and required component of gestating and lactating sow diets for both liver health and prevention of leg deformity.

Choline, which is manufactured and sold in both dry and aqueous forms, plays a vital role in the metabolism of fat in these animals.

In poultry, choline deficiency can result in reduced growth rates and perosis in young birds, while in swine production choline is a necessary and required component of gestating and lactating sow diets for both liver health and prevention of leg deformity.

Sales of value-added encapsulated products are highly dependent on overall industry economics as well as the Company's ability to leverage the results of university and field research on the animal health and production benefits of our products.

Management believes that success in the commodity-oriented basic choline chloride marketplace is highly dependent on the Company’s ability to maintain its strong reputation for excellent product quality and customer service.

Management believes that success in the commodity-oriented basic choline chloride marketplace is highly dependent on the Company’s ability

to maintain its strong reputation for excellent product quality and customer service.

The Company continues to drive production efficiencies in order to maintain its competitive-cost position to effectively compete in a global marketplace.

3 unchanged sentences

Specialty Products' 100% ethylene oxide product and blends are distributed worldwide in specially designed, reusable and recyclable drum and cylinder packaging, to assure compliance with safety, quality and environmental standards as outlined by the applicable regulatory agencies in the countries our products are shipped to.

The Company’s inventory of these specially built drums and cylinders, along with its five filling facilities, represents a significant capital investment.

Specialty Products’s inventory of these specially built drums and cylinders, along with its five filling facilities, represents a significant capital investment.

Contract sterilizers and medical device manufacturers are principal customers for this product.

The Company also sells single use canisters with 100% ethylene oxide for use in sterilizing re-usable devices typically processed in autoclave units in hospitals.

Specialty Products also sells single use canisters with 100% ethylene oxide for use in sterilizing re-usable devices typically processed in autoclave units in hospitals.

As a fumigant, ethylene oxide blends are highly effective in killing bacteria, fungi, and insects in spices and other seasoning materials.

The Company also distributes a number of other gases for various uses, most notably propylene oxide and ammonia.

Specialty Products also distributes a number of other gases for various uses, most notably propylene oxide and ammonia.

Propylene oxide is marketed and sold in the U.S.

1 unchanged sentence

and to reduce bacterial and mold contamination in certain shell and processed nut meats, processed spices, cacao beans, cocoa powder, raisins, figs and prunes.

The Company distributes its propylene oxide product in the U.S.

Specialty Products distributes its propylene oxide product in the U.S.

primarily in recyclable, single-walled, carbon steel cylinders according to standards outlined by the Environmental Protection Agency ("EPA") and the Department of Transportation ("DOT").

1 unchanged sentence

Ammonia is used primarily as a refrigerant, and also for heat treatment of metals and various chemical synthesis applications, and is distributed in reusable and recyclable drum and cylinder packaging, which are approved for use in the countries these products are shipped to.

The Company's inventory of cylinders for these products also represents a significant capital investment.

The Company’s micronutrient agricultural nutrition business sells chelated minerals primarily into high value crops.

The Company has a unique and patented two-step approach to solving mineral deficiency in plants to optimize health, yield and shelf-life.

First, the Company determines optimal mineral balance for plant health.

The Company then has a foliar applied Metalosate ® product range, utilizing patented amino acid chelate technology.

Its products quickly and efficiently deliver mineral nutrients.

Specialty Products' inventory of cylinders for these products also represents a significant capital investment.

Specialty Products’ micronutrient agricultural nutrition business sells chelated minerals primarily into high value crops.

Specialty Products has a unique and patented two-step approach to solving mineral deficiency in plants to optimize health, yield and shelf-life.

First, Specialty Products determines optimal mineral balance for plant health.

Specialty Products then supplies a foliar applied Metalosate ® product range, utilizing patented amino acid chelate technology in order to optimize mineral balance.

These products quickly and efficiently deliver mineral nutrients.

As a result, the farmer/grower gets healthier crops that are more resistant to disease and pests, larger yields and healthier food for the consumer with extended shelf life for produce being shipped long distances.

The segment information is summarized as follows:

Business Segment Assets September 30,

Business Segment Assets March 31,

2022 December 31,

6 unchanged sentences

Business Segment Net Sales Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Human Nutrition & Health $ 122,445 $ 104,516

2 unchanged sentences

Other and Unallocated (2)

2,862 2,194 7,237 5,874

Total $ 228,867 $ 185,656

Business Segment Earnings Before Income Taxes Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Human Nutrition & Health $ 20,303 $ 19,690

6 unchanged sentences

Depreciation/Amortization Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Human Nutrition & Health $ 7,355 $ 7,573

2 unchanged sentences

Other and Unallocated (2)

758 564 2,273 1,687

Total $ 11,928 $ 12,364

Capital Expenditures Nine Months Ended

September 30,

Capital Expenditures Three Months Ended

Human Nutrition & Health $ 4,760 $ 3,967

7 unchanged sentences

Unallocated corporate expenses consist of:

(i) Transaction and integration costs, ERP implementation costs, and unallocated legal fees totaling $ 305 and $ 1,005 for the three and nine months ended September 30, 2021, respectively, and $ 161 and $ 2,179 for the three and nine months ended September 30, 2020, respectively, and (ii) Unallocated amortization expense of $ 675 and $ 2,024 for the three and nine months ended September 30, 2021, respectively, and $ 470 and $ 1,417 for the three and nine months ended September 30, 2020, respectively, related to an intangible asset in connection with a company-wide ERP system implementation and capitalized loan issuance costs that were included in interest expense in the Company's consolidated statement of earnings.

(i) Transaction and integration costs, ERP implementation costs, and unallocated legal fees totaling $ 304 and $ 234 for the first quarter of 2022 and 2021, respectively, and (ii) Unallocated amortization expense of $ 809 and $ 675 for the first quarter of 2022 and 2021, respectively, related to an intangible asset in connection with a company-wide ERP system implementation and capitalized loan issuance costs that was included in interest expense in Company's consolidated statement of earnings.

NOTE 11 – REVENUE

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Product Sales $ 218,053 $ 175,988

Co-manufacturing 8,307 7,278

Bill and Hold — 763 — 1,158

Consignment 1,591 1,051

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

United States $ 174,491 $ 137,851

2 unchanged sentences

Product Sales Revenues

The Company’s primary operation is the manufacturing and sale of health and nutrition ingredient products, in which the Company receives an order from a customer and fulfills that order.

The Company’s primary operation is the manufacturing and sale of health and wellness ingredient products, in which the Company receives an order from a customer and fulfills that order.

The Company’s product sales are considered point-in-time revenue and consist of four sub-streams:

16 unchanged sentences

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during the nine months ended September 30, 2021 and 2020 for income taxes and interest is as follows:

Nine Months Ended

September 30,

Cash paid during the three months ended March 31, 2022 and 2021 for income taxes and interest is as follows:

Three Months Ended

Income taxes $ 2 $ 2

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net foreign currency translation adjustment $ ( 2,842 ) $ ( 6,143 )

Net change of cash flow hedge (see Note 19 for further information)

Unrealized gain (loss) on cash flow hedge 450 299 1,583 ( 3,585 )

Unrealized gain on cash flow hedge 2,084 677

Tax ( 511 ) ( 165 )

3 unchanged sentences

Amortization of gain — ( 5 )

Prior service credit — — ( 4 ) —

Gain arising during the period and prior service credit ( 32 ) ( 4 )

Total before tax ( 30 ) 9

Tax ( 3 ) 2 ( 9 ) 3

Adjustment (1)

— 129 — ( 455 )

Net of tax and adjustment ( 27 ) 7

Total other comprehensive (loss) income $ ( 3,010 ) $ 4,677 $ ( 6,751 ) $ 4,347

(1) One time adjustment to the postretirement account.

Included in "Net foreign currency translation adjustment" were gains of $ 1,715 and $ 3,888 , related to a net investment hedge, which were net of taxes of $ 553 and $ 1,243 for the three and nine months ended September 30, 2021, respectively.

Included in "Net foreign currency translation adjustment" were losses of $ 3,891 and $ 986 , re lated to a net investment hedge, which were net of taxes of $ 1,244 and $ 330 for the three and nine months ended September 30, 2020, respectively.

Total other comprehensive loss $ ( 1,296 ) $ ( 5,624 )

Included in "Net foreign currency translation adjustment" were gains of $ 1,123 and $ 3,197 , related to a net investment hedge, which were net of taxes of $ 333 and $ 1,026 for the three months ended March 31, 2022 and 2021, respectively.

See Note 19, "Derivative Instruments and Hedging Activities."

Accumulated other comprehensive income/(loss) at September 30, 2021 and December 31, 2020 consisted of the following:

Accumulated other comprehensive income (loss) at March 31, 2022 and December 31, 2021 consisted of the following:

Foreign currency

3 unchanged sentences

Other comprehensive (loss) income ( 2,842 ) 1,573 ( 27 ) ( 1,296 )

Balance September 30, 2021 $ ( 328 ) $ ( 2,480 ) $ 230 $ ( 2,578 )

Balance March 31, 2022 $ ( 6,444 ) $ ( 58 ) $ 213 $ ( 6,289 )

NOTE 14 – EMPLOYEE BENEFIT PLANS

8 unchanged sentences

Net periodic benefit costs for such retirement medical plans were as follows:

Nine Months Ended

September 30,

Three Months Ended

Service cost $ 20 $ 22

3 unchanged sentences

Net periodic benefit cost $ 28 $ 40

T he amount recorded for these obligations on the Company’s balance sheets as of September 30, 2021 and December 31, 2020 is $ 1,456 and $ 1,374 , respectively, and are included in other long-term obligations.

The amount recorded for these obligations on the Company’s balance sheets as of March 31, 2022 and December 31, 2021 were $ 1,197 and $ 1,293 , respectively, and are included in other long-term obligations.

These plans are unfunded and approved claims are paid from Company funds.

H istorical cash payments made under such plans have typically been less than $ 100 per year.

Defined Benefit Pension Plan

On May 27, 2019, the Company acquired Chemogas Holding NV, a privately held specialty gases company headquartered in Grimbergen, Belgium ("Chemogas"), which has an unfunded defined benefit pension plan.

Historical cash payments made under such plans have typically been less than $ 200 per year.

Defined Benefit Pension Plans

On May 27, 2019, the Company acquired Chemogas, which has an unfunded defined benefit pension plan.

The plan provides for the payment of a lump sum at retirement or payments in case of death of the covered employees.

The amount recorded for these obligations on the Company's consolidated balance sheets as of September 30, 2021 and December 31, 2020 w ere $ 934 and $ 950 , respectively, and were included in other long-term obligations.

Net periodic benefit costs for such benefit pensions plan were as follows:

Nine Months Ended

September 30,

The amount recorded for these obligations on the Company's consolidated balance sheet as of March 31, 2022 and December 31, 2021 were $ 676 and $ 684 , respectively, and were included in other long-term obligations.

Net periodic benefit costs for such benefit pension plans were as follows:

Three Months Ended

Service cost with interest to end of year $ 11 $ 17

1 unchanged sentence

Expected return on plan assets ( 10 ) ( 9 )

Amortization of loss 2 —

Amortization of gain — 1

Total net periodic benefit cost $ 6 $ 13

Deferred Compensation Plan

On June 1, 2018, the Company established an unfunded, nonquali fied deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees.

On June 1, 2018, the Company established an unfunded, nonqualified deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees.

Assets of the plan are held in a rabbi trust, which are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company.

The de ferred compensation liability was $ 6,077 and $ 3,581 as of September 30, 2021 and December 31, 2020, respectively, and was included in other long-term obligations on the Company’s consolidated balance sheets.

The related rabbi trust assets were $ 6,076 and $ 3,581 as of September 30, 2021 and December 31, 2020, respectively, and were included in other non-current assets on the Company's consolidated balance sheets.

The deferred compensation liability was $ 8,206 and $ 6,270 as of March 31, 2022 and December 31, 2021, respectively, and was included in other long-term obligations on the Company’s consolidated balance sheets.

The related rabbi trust assets were $ 8,208 and $ 6,267 as of March 31, 2022 and December 31, 2021, respectively, and were included in other non-current assets on the Company's consolidated balance sheets.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at September 30, 2021 are as follows:

October 1, 2021 to December 31, 2021 $ 828

Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at March 31, 2022 are as follows:

April 1, 2022 to December 31, 2022 $ 2,097

Thereafter 1,930

2 unchanged sentences

Remediation was conducted by the prior owner under the oversight of the EPA and the Missouri Department of Natural Resources.

While BCP Ingredients, Inc.

("BCP"), the Company's subsidiary that operates the site, must maintain the integrity of the capped areas in the remediation areas on the site, the prior owner is responsible for completion of any further Superfund remedy.

The Company is indemnified by the sellers under its May 2001 asset purchase agreement covering its acquisition of the facility for potential liabilities associated with the Superfund site.

In September 2020, BCP received a General Notice Letter from the EPA regarding BCP's potential liability for 1,4 dioxane contamination at the site.

BCP currently believes that the 1,4 dioxane contamination is associated with the former owner’s operations and has engaged experts to study site conditions and hydrogeology in connection with preparing its responses.

The Company is indemnified by the sellers under its May 2001 asset purchase agreement covering its acquisition of the Verona, Missouri facility for certain potential liabilities associated with the Superfund site.

In February 2022, BCP Ingredients, Inc.

("BCP"), the Company subsidiary that operates the site, along with the former owner of the site received a Special Notice Letter from EPA for the performance of a focused remedial investigation/feasibility study at the site with regard to the presence of certain contaminants, focusing primarily on 1,4 dioxane.

BCP has, with the assistance of experts, studied site conditions and hydrogeology and responded to the Special Notice Letter.

BCP anticipates that the EPA will respond to its response in the coming months.

From time to time, the Company is a party to various litigation, claims and assessments.

2 unchanged sentences

The Company has a number of financial instruments, none of which are held for trading purposes.

The Company estimates that the fair value of all financial instruments at September 30, 2021 and December 31, 2020 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying consolidated balance sheets.

The Company estimates that the fair value of all financial instruments at March 31, 2022 and December 31, 2021 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying consolidated balance sheets.

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies.

Considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value, and, accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The carrying value of debt approximates fair value as the interest rate is based on market and the Company’s

consolidated leverage ratio.

The carrying value of debt approximates fair value as the interest rate is based on market and the Company’s consolidated leverage ratio.

The Company’s financial instruments also include cash equivalents, accounts receivable, accounts payable, and accrued liabilities, which are carried at cost and approximate fair value due to the short-term maturity of these instruments.

Cash and cash equivalents at September 30, 2021 and December 31, 2020 includes $ 813 and $ 817 in money market funds, respectively.

Non-current assets at September 30, 2021 and December 31, 2020 includes $ 6,076 and $ 3,581 , respectively, of rabbi trust funds related to the Company's deferred compensation plan.

The money market and rabbi trust funds ar e valued using level one inputs, as defined by ASC 820, “Fair Value Measurement.”

Cash and cash equivalents at March 31, 2022 and December 31, 2021 includes $ 937 and $ 933 in money market funds, respectively.

Non-current assets at March 31, 2022 and December 31, 2021 includes $ 8,208 and $ 6,267 , respectively, of rabbi trust funds related to the Company's deferred compensation plan.

The money market and rabbi trust funds are valued using level one inputs, as defined by ASC 820, “Fair Value Measurement.”

The Company also has derivative financial instruments, consisting of a cross-currency swap and an interest rate swap, which are included in derivative assets or derivative liabilities, in the consolidated balance sheets (see Note 19, "Derivative Instruments and Hedging Activities").

The fair values of these derivative instruments are determined based on Level 2 inputs, using significant inputs that are observable either directly or indirectly, including interest rate curves and implied volatilities.

The derivative liability related to the cross-currency swap was $ 1,662 and $ 6,793 at September 30, 2021 and December 31, 2020, respectively.

The derivative liability related to the interest rate swap was $ 3,282 and $ 4,865 at September 30, 2021 and December 31, 2020, respectively.

The derivative asset related to the cross-currency swap was $ 956 at March 31, 2022 and the derivative liability related to the cross-currency swap was $ 500 at December 31, 2021.

The derivative liability related to the interest rate swap was $ 74 and $ 2,158 at March 31, 2022 and December 31, 2021, respectively.

NOTE 17 – RELATED PARTY TRANSACTIONS

The Company provides services under a contractual agreement to St.

The Company provides services on a contractual agreement to St.

Gabriel CC Company, LLC.

6 unchanged sentences

Gabriel CC Company, LLC in this scenario lacks economic substance and therefore the Company does not include them in net sales within the consolidated statements of earnings.

Payments for the services the Company provided amounted to $ 901 and $ 2,648 for the three and nine months ended September 30, 2021, respectively, and $ 834 and $ 2,544 for the three and nine months ended September 30, 2020, respectively.

The raw materials purchased and subsequently sold amounted to $ 6,419 and $ 18,461 for the three and nine months ended September 30, 2021, respectively, and $ 2,716 and $ 10,330 for the three and nine months ended September 30, 2020, respectively.

The services the Company provided amounted to $ 975 and $ 827 for the three months ended March 31, 2022 and 2021, respectively.

The raw materials purchased and subsequently sold amounted to $ 9,311 and $ 5,462 for the three months ended March 31, 2022 and 2021, respectively.

These services and raw materials are primarily recorded in cost of goods sold net of the finished goods received from St.

Gabriel CC Company, LLC of $ 4,944 and $ 14,545 for the three and nine months ended September 30, 2021, respectively, and $ 2,382 and $ 9,123 for the three and nine months ended September 30, 2020, respectively.

At September 30, 2021 and December 31, 2020, the Company had receivables of $ 4,657 and $ 2,809 , respectively, recorded in accounts receivable from St.

Gabriel CC Company, LLC for services rendered and raw materials sold.

The Company also had payables of $ 3,109 and $ 2,239 , respectively, recorded in accounts payable for finished goods received from St.

Gabriel CC Company, LLC.

In addition, the Company had receivables in the amount of $ 4 and $ 72 related to non-contractual monies owed from St.

Gabriel CC Company, LLC, recorded in receivables as of September 30, 2021 and December 31, 2020, respectively.

The Company had payables in the amount of $ 296 related to non-contractual monies owed to St.

Gabriel CC Company, LLC, recorded in accounts payable as of September 30, 2021 and December 31, 2020, respectively.

Gabriel CC Company, LLC of $ 6,489 and $ 4,391 for the three months ended March 31, 2022 and 2021, respectively.

At March 31, 2022 and December 31, 2021, the Company had receivables of $ 13,651 and $ 10,504 , respectively, recorded in accounts receivable from St.

Gabriel CC Company, LLC for services rendered and raw materials sold and payables of $ 8,673 and $ 7,552 , respectively, for finished goods received recorded in accounts payable.

In addition, the Company had receivables in the amount of $ 164 , related to non-contractual monies owed from St.

Gabriel CC Company, LLC, recorded in receivables as of December 31, 2021.

There was no such receivables as of March 31, 2022.

The Company had payables in the amount of $ 318 and $ 296 related to non-contractual monies owed to St.

Gabriel CC Company, LLC, recorded in accounts payable as of March 31, 2022 and December 31, 2021, respectively.

NOTE 18 – LEASES

1 unchanged sentence

The main types of equipment leases include forklifts, trailers, printers and copiers, railcars, and trucks.

Leases are categorized as both operating leases and finance leases.

Leases are categorized as either operating leases or finance leases.

As a result of electing the practical expedient within ASU 2016-02, variable lease payments are combined and recognized on the balance sheet in the event that those charges and any related increases are explicitly stated in the lease.

Such payments include common area maintenance charges, property taxes, and insurance charges and are recorded in the right of use asset and corresponding liability when the payments are stated in the lease with (a) fixed or in-substance fixed amounts, or (b) a variable payment based on an index or rate.

Due to the acquisitive nature of the Company and the potential for synergies upon integration of acquired entities, the Company determined that the reasonably certain criterion could not be met for any renewal periods beginning two years from September 30, 2021.

In addition, the Company has historically not been exercising purchase options under the equipment leases as it does not make economic sense to buy the equipment.

Instead, the Company has historically replaced the equipment with new leases.

In addition, the Company has historically not been exercising purchase options with equipment leases as it does not make economic sense to buy the leased equipment.

Instead, the Company has historically replaced the leased equipment with a newly leased equipment.

Therefore, the Company determined that the reasonably certain criterion could not be met as it relates to purchase options.

3 unchanged sentences

Management determined that since the Company has a centralized treasury function, the parent company would either fund or guarantee a subsidiary's loan for borrowing over a similar term.

As such, the Company's management determined it is appropriate to utilize a

corporate based borrowing rate for all locations.

As such, the Company's management determined it is appropriate to utilize a corporate based borrowing rate for all locations.

The Company developed four tranches of leases based on lease terms and these tranches reflect the composition of the current lease portfolio.

3 unchanged sentences

(1) 1 - 2 years, 1.45 % (2) 3 - 4 years, 2.04 % (3) 5 - 9 years, 2.38 % and (4) 10 + years, 3.10 %.

In connection with its December 2019 acquisition of Zumbro River Brand, Inc., the Company assumed the finance lease commitment for a warehouse, with an expiration date of March 31, 2033.

In connection with the acquisition of Zumbro, the Company assumed a finance lease commitment for a warehouse, with an expiration date of March 31, 2033.

The warehouse can be purchased at a pre-determined price beginning in 2023.

At September 30, 2021 and December 31, 2020, the Company had finance lease liabilities of $ 2,510 and $ 2,631 , respectively, which were recorded under lease liabilities (current and non-current) in the consolidated balance sheet.

Right of use assets and lease liabilities at September 30, 2021 and December 31, 2020 are summarized as follows:

Right of use assets September 30, 2021 December 31, 2020

Right of use assets and lease liabilities at March 31, 2022 and December 31, 2021 are summarized as follows:

Right of use assets March 31, 2022 December 31, 2021

Operating leases $ 6,901 $ 6,929

1 unchanged sentence

Total $ 9,209 $ 9,288

Lease liabilities - current September 30, 2021 December 31, 2020

Lease liabilities - current March 31, 2022 December 31, 2021

Operating leases $ 2,194 $ 2,194

1 unchanged sentence

Total $ 2,363 $ 2,361

Lease liabilities - non-current September 30, 2021 December 31, 2020

Lease liabilities - non-current March 31, 2022 December 31, 2021

Operating leases $ 4,730 $ 4,811

1 unchanged sentence

Total $ 6,990 $ 7,114

For the three and nine months ended September 30, 2021 and 2020, the Company's total lease costs were as follows, which included amounts recognized in earnings, amounts capitalized on the balance sheets, and the cash flows arising from lease transactions:

For the three months ended March 31, 2022 and 2021, the Company's total lease costs were as follows, which included both amounts recognized in profits or losses during the period and amounts capitalized on the balance sheet, and the cash flows arising from lease transactions:

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Operating lease cost $ 781 $ 716

2 unchanged sentences

Interest on lease liabilities 31 33

Total finance lease 84 261 255 261

Total finance lease cost $ 83 $ 85

Total lease cost $ 864 $ 801

3 unchanged sentences

Financing cash flows from finance leases 41 39

$ 833 $ 926 $ 2,465 $ 2,409

Right-of-use assets obtained in exchange for new operating lease liabilities, net of right-of-use assets disposed $ 502 $ — $ 2,914 $ ( 98 )

Right-of-use assets obtained in exchange for new finance lease liabilities, net of right-of-use assets disposed $ — $ 2,782 $ — $ 2,782

Weighted-average remaining lease term - operating leases 4.32 years 5.11 years 4.32 years 5.11 years

Weighted-average remaining lease term - finance leases 11.67 years 12.50 years 11.67 years 12.50 years

ROU assets obtained in exchange for new operating lease liabilities, net of ROU assets disposals $ 662 $ 1,036

Weighted-average remaining lease term - operating leases 4.03 years 4.14 years

Weighted-average remaining lease term - finance leases 11.16 years 12.00 years

Weighted-average discount rate - operating leases 3.3 % 4.2 %

Weighted-average discount rate - finance leases 5.1 % 5.1 %

Rent expense charged to operations under operating lease agreements for the three and nine months ended September 30, 2021 aggregated to approximately $ 788 and $ 2,274 , respectively, and $ 702 and $ 2,179 for the three and nine months ended September 30, 2020, respectively.

Rent expense charged to operations under operating lease agreements for the three months ended March 31, 2022 and 2021 aggregated approximately $ 781 and $ 716 , respectively.

NOTE 19 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

1 unchanged sentence

In May 2019, the Company entered into an interest rate swap (cash flow hedge) with the JP Morgan Chase, N.A.

(the "Swap Counterparty") and a cross-currency swap (net investment hedge) with the JP Morgan Chase, N.A.

(the "Bank Counterparty").

(the "Swap Counterparty") and a

cross-currency swap (net investment hedge) with the JP Morgan Chase, N.A.

(the "the Bank Counterparty").

The Company's primary objective for holding derivative financial instruments is to manage interest rate risk and foreign currency risk.

On May 28, 2019, the Company entered into a pay-fixed ( 2.05 %), receive-floating interest rate swap with a notional amount of $ 108,569 and a maturity date of June 27, 2023.

The Company's risk management objective and strategy with respect to the interest rate swap is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on the notional amount of the interest rate swap.

The Company is meeting its objective since changes in the cash flows of the interest rate swap are expected to exactly offset the changes in the cash flows attributable to fluctuations in the contractually specified interest rate on the interest payments associated with the Credit Agreement.

The net interest expense related to the interest rate swap contract was $ 538 and $ 1,593 for the three and nine months ended September 30,

2021, and $ 515 and $ 1,066 for the three and nine months ended September 30, 2020, respectively, were recorded in the condensed consolidated statements of operations under interest expense, net.

The net interest expense related to the interest rate swap contract were $ 513 and $ 521 for the three months ended March 31, 2022 and 2021, which were recorded in the consolidated statements of operations under interest expense, net.

At the same time, the Company also entered into a pay-fixed ( 0.00 %), receive-fixed ( 2.05 %) cross-currency swap to manage foreign exchange risk related to the Company's net investment in Chemogas.

The derivative has a notional amount of $ 108,569 , an effective date of May 28, 2019, and a maturity date of June 27, 2023.

The interest income related to the cross-currency swap contract was $ 563 and $ 1,682 for the three and nine months ended September 30, 2021, and $ 562 and $ 1,706 for the three and nine months ended September 30, 2020, respectively, which were recorded in the condensed consolidated statements of operations under interest expense, net.

Interest income related to the cross-currency swap contract was $ 550 and $ 556 , respectively, for the three months ended March 31, 2022 and 2021, which was recorded in the condensed consolidated statements of operations under interest expense, net.

The derivative instruments are with a single counterparty and are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract.

As such, the derivative instruments are categorized as a master netting arrangement and presented as a net derivative asset or derivative liability on the consolidated balance sheets.

As of September 30, 2021 and December 31, 2020, the fair value of the derivative instruments is presented as follows in the Company's condensed consolidated balance sheets:

Derivative liabilities September 30, 2021 December 31, 2020

As of March 31, 2022 and December 31, 2021, the fair value of the derivative instruments is presented as follows in the Company's consolidated balance sheets:

Derivative assets (liabilities) March 31, 2022 December 31, 2021

Interest rate swap $ ( 74 ) $ ( 2,158 )

Cross-currency swap 956 ( 500 )

Derivative liabilities $ 4,944 $ 11,658

Derivative assets (liabilities) $ 882 $ ( 2,658 )

On a quarterly basis, the Company assesses whether the hedging relationship related to the interest rate swap is highly effective at achieving offsetting changes in cash flow attributable to the risk being hedged based on the following factors:

(1) the key features and terms as enumerated above for the interest rate swap and hedged transactions match during the period (2) it is probable that the Swap Counterparty will not default on its obligations under the swap, and (3) the Company performs a qualitative review each quarter to assess whether the relationship qualifies for hedge accounting.

(1) whether the key features and terms as enumerated above for the interest rate swap and hedged transactions match during the period (2) whether it is probable that the Swap Counterparty will not default on its obligations under the swap, and (3) whether the relationship qualifies for hedge accounting based on the Company's quarterly qualitative review.

In addition, on a quarterly basis the Company assesses whether the hedging relationship related to the cross-currency swap is highly effective based on the following evaluations:

(1) the Company will always have a sufficient amount of non-functional currency (EUR) net investment balance to at least meet the cross-currency notional amount until the maturity date of the hedge (2) it is probable that the Swap Counterparty will not default on its obligations under the swap, and (3) the Company performs a qualitative review each quarter to assess whether the relationship qualifies for hedge accounting.

(1) whether the Company will always have a sufficient amount of non-functional currency (EUR) net investment balance to at least meet the cross-currency notional amount until the maturity date of the hedge (2) whether it is probable that the Swap Counterparty will not default on its obligations under the swap, and (3) whether the relationship qualifies for hedge accounting based on the Company's quarterly qualitative review.

If any mismatches arise for either the interest rate swap or cross-currency swap, the Company will perform a regression analysis to determine if the hedged transaction is highly effective.

If determined not to be highly effective, the Company will discontinue hedge accounting.

As of September 30, 2021, the Company assessed the hedging relationships for the interest rate swap and cross-currency swap and determined them to be highly effective.

As of March 31, 2022, the Company assessed the hedging relationships for the interest rate swap and cross-currency swap and determined them to be highly effective.

As such, the net change in fair values of the derivative instruments was recorded in accumulated other comprehensive income.

Losses and gains on our hedging instruments are recognized in accumulated other comprehensive income (loss) and categorized as follows for the three and nine months ended September 30, 2021 and 2020:

Gains on our hedging instruments are recognized in accumulated other comprehensive income (loss) and categorized as follows for the three months ended March 31, 2022 and 2021:

Location within Statements of Comprehensive Income Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Cash flow hedge (interest rate swap), net of tax Unrealized gain/(loss) on cash flow hedge, net $ 341 $ 227 $ 1,204 $ ( 2,659 )

Cash flow hedge (interest rate swap), net of tax Unrealized gain on cash flow hedge, net $ 1,573 $ 512

Net investment hedge (cross-currency swap), net of tax Net foreign currency translation adjustment 1,123 3,197

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements